At 10.15am (AEST), the benchmark S&P/ASX200 was up 46.7 points, or 0.95 per cent, at 4951.5, while the broader All Ordinaries gained 42 points, or 0.85 per cent, to 4976.6.
The December share price index futures contract was 44 points higher at 5000, on a volume of 5824 contracts.
Financial stocks led the way, with Commonwealth Bank adding 46 cents to $44.89, National Australia Bank picking up 67 cents, or 2.6 per cent, to $26.47, while ANZ lifted 35 cents, or 1.84 per cent, to $19.35.
Westpac gained 33 cents, or 1.38 per cent, to $24.31 and its takeover target St George Bank added 48 cents, or 1.52 per cent, to $31.98.
In the big miners, BHP Billiton lost 12 cents to $35.72, while takeover target Rio Tinto dropped $1.67, or 1.65 per cent, to $99.33.
On Friday in the US, financial markets remained on edge after the Bush administration's proposal for a $US700 billion banking bailout ran into opposition from Republican and Democrat congressmen alike. The Dow rose 121.07 points, or 1.10 per cent, to 11,143.13.
But broader indicators were mixed. The Standard & Poor's 500 index rose 3.83 points, or 0.32 per cent to 1213.01, while the technology-heavy NASDAQ fell 3.23 points, or 0.15 per cent, to 2183.34.
CMC markets senior dealer Dominic Vaughan said the local market had produced a mixed bag of stocks today.
"The financial sector is up by 2 per cent on the back of expectation that there maybe a rally from the US, but as yet nothing has been clarified," Mr Vaughan said.
"Commodity prices are struggling as a result of softer metal prices" over the weekend.
In news this morning, retailer Myer Group has delivered net profit for 2008 up almost 40 per cent, and has forecast improved profitability by mid-2010.
The unlisted group today reported net profit for fiscal 2008 of $93.579 million, up from $73.432 million in the prior year.
David Jones was steady at $4.53, Woolworths added 42 cents to $28.52, and Coles owner Wesfarmers lifted 30 cents to $29.58.
The energy sector was higher.
Woodside Petroleum added 60 cents to $56.40, Santos rose 44 cents, or 2.21 per cent, to $20.39, and Oil Search gained six cents to $5.79.
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Shares rise on US bailout talks
